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Monday, July 11, 2016

Paul Krugman, "Cheap Money Talks": Borrow, Baby, Borrow!

Telling us just how low interest rates have become in his latest New York Times op-ed entitled "Cheap Money Talks," Paul Krugman would again have the US take on more debt:

"Meanwhile, there are huge unmet demands for public investment on both sides of the Atlantic. America’s aging infrastructure is legendary, but not unique: years of austerity have left German roads and railways in worse shape than most people realize. So why not borrow money at these low, low rates and do some much-needed repair and renovation? This would be eminently worth doing even if it wouldn’t also create jobs, but it would do that too.

I know, deficit scolds would issue dire warnings about the evils of public debt. But they have been wrong about everything for at least the past eight years, and it’s time to stop taking them seriously."

All fine and good were it not for the fact that America's national debt now stands at some $19.4 trillion. Or stated otherwise, Obama and friends have effectively bankrupted the US. Do you remember how Obama declared in 2008:

"The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents – #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic."

Well, US debt now amounts to $60,000 "for every man, woman and child." That's irresponsible. It's unpatriotic. More to the point, it's unsustainable.

It hasn't exploded over the past eight years? Well, all bad habits ultimately catch up with you. It's only a matter of time.

Money is cheap? So are drugs, when the pusher tries to get you addicted.

What happens afterwards, when interest rates ultimately go up, and the US is forced to pay the piper? As already noted, US debt is not sustainable, and the world should expect a sorry awakening.

"...The 1938 constitutional amendments attempted to limit the proliferation of public authorities by specifying that they could be created only by special act of the state legislature. By 1956, 53 public authorities had been created. In 1990, the Commission on Government Integrity concluded that "At present, so far as Commission staff has been able to determine, no one has even an approximate count of how many of these organizations exist, where they are, much less an accounting of what they do." By 2004, the Office of the State Comptroller had identified at least 640 state and local authorities.[2] The current count stands at 1,098..."

including one for the 1980 Olympics and...the Erie Canal, Date completedOctober 26, 1825